Often clients ask question where they should invest their savings, RRSPs (Registered retirement savings plan) or TFSA (Tax free savings Account). It is not a brainer. At WCA chartered professional Accountant we always advise clients to put maximum towards RRSP contribution. With RRSP contribution clients do not only save for their retirement but get an immediate tax refund approximately 30-40% depending on client’s tax bracket. Tax refund can be used to pay credit card bills, towards children tuition or renovation project. No other investment gives such an attractive return in such a short span of time period. And client’s principal money remains invested and keep growing until they reach the age to start withdrawing from their RRSP account.
On the other hand TFSA is only good for those who have maximized their RRSP contribution room, have no more room to contribute and still have savings that should be invested in tax free savings account. Growth in tax free savings account results in zero tax. Every Canadian can invest up to $5,000 every year in tax free savings account and enjoy tax free growth.
For reliable tax advice contact Principal Waseem Aslam, CPA at WCA Chartered professional Accountant located in Burlington Ontario. Waseem Aslam, CPA has over 20 years of experience dealing with different tax situations and representing clients with Canada revenue agency.